Distribution goes digital

The convenience and cost of virtual sourcing is leading operators to shop around.
online ordering

A recent survey from Chicago researcher Technomic found that restaurant operators are cutting purchasing costs by an average of 12 to 13 percent (including shipping) by buying online, as opposed to going through their broadliner. The virtual services primarily are being embraced, the 2014 report shows, by street operators—mostly independents—with about 27 percent of them buying online once a month or more.

Operators are getting more savvy about pricing, says Technomic SVP Joe Pawlak. They understand that buying through a broadliner sometimes entails markups from manufacturers and other hidden costs. “Operators want more transparency in pricing,” he says, and they are finding it online.

There’s an array of old and new entrants—some dedicated strictly to foodservice, others more generalist. Ones operators use most, according to Technomic, include Websterant, Katom Restaurant Supply, Foodservice Direct, Direct Source Product, Ebay, Netgrocer, Fresh Direct and—the most high-profile new entrant—Amazon Business, the Web giant’s business-facing purchasing arm, which launched in April. All are third-party suppliers, not affiliated with a distributor or manufacturer, and deliver through UPS, FedEx or the postal service.

Pricing is the biggest draw for operators but not the only one. No minimums, easy credit-card payments and a wide assortment of options all were cited by operators in Technomic’s survey as appealing qualities.

Jackie Sappington is co-owner and executive pastry chef at Portland, Ore.’s Country Cat, a 55-seat, full-service restaurant known for its fried chicken and other American fare. Last spring, Sappington needed four loaf pans—the kind used to make a loaf of sandwich bread—so she reached out to her distributor. They didn’t have them in stock, and offered to order them. But when she learned delivery would take two weeks, she decided to look online, found what she needed and placed the order. “I don’t have a lot of time,” says Sappington. “When I need something, I need it, and I can’t always wait for my rep to get it for me.”

Not surprisingly, Technomic’s research found that the largest categories for online purchasing are nonfood items and dry goods. Refrigerated and perishable goods are not yet being embraced because of quality-control concerns.

Pawlak predicts technology will come to bear over the next 10 years in the form of deliverable refrigerated pods, or the like, to close that quality gap. And big-name distributors could still get in on the online game. In the meantime, online purchasing has not made the traditional DSR obsolete.

Mike Rowan, director of food and beverage at Deschutes Brewery, also in Portland, says a store manager ordered coolers online, one of which lasted less than two years. “It wasn’t what we expected, and I didn’t have the backing of a local distributor.”

Rowan says he’ll buy smallwares online, “things you can’t go wrong with,” but otherwise he’ll stick with his distributor. “If something goes wrong, we’ve got somebody to talk to,” he says.

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